It’s that time of year again when Buyers in the market for a house in Toronto start to get depressed. They’ve fallen in love with a few houses, made some offers and had their butts kicked in bidding wars. More than a few times this past week, I’ve had Buyers approach me with the same request:
I want a house, but I don’t want to participate in a bidding war.
Reality Check: It’s a Seller’s market for houses in Toronto and unfortunately, you don’t get to call the shots. If you want a house, you may have to play by their rules.
There are however a few things you can do avoid a bidding war:
How to Avoid a Bidding War
- Renovated houses in prime locations are most in demand – if you want to avoid a bidding war, consider the house that needs a new kitchen or the one that’s in a more transitional neighbourhood.
- Be ready and be quick. Your REALTOR has access to properties the minute they come on the market (people working with an agent generally get listings the day after they’ve been listed, and if you’re relying on realtor.ca, well you’re waiting a few days before seeing what’s available). Work with a REALTOR who monitors what comes on the market in real time, and be ready to attend a showing on short notice. Some of our happiest clients got their dream house within hours of it coming on the market,before anyone else ever got a chance to see it. Our favourite BREL be-ready story: a firm offer at asking price 1.5 hours after the property went up for sale. Boom! Bidding war averted.
- Be ready to pull the trigger. If you do find a house that isn’t trying to generate a bidding war (in other words, they aren’t refusing to look at offers for a week in the hopes of getting multiple offers and will look at offers anytime) you need to be ready: have your deposit in your bank account (usually 5% of the purchase price), have a home inspector on call and be ready to make a quick decision. We once avoided a bidding war because the other Buyer was ‘sleeping on it’ – so we went in with our offer at 11 PM and made the Sellers make a decision before the other Buyer woke up.
- If the house you want is accepting offers anytime, don’t make the newbie mistake of making a crappy first offer – that just encourages the Seller to look for another Buyer to compete with you. If the house has only been on the market for a couple of days, you aren’t likely going to convince them to accept much less than their asking price. I’ve seen too many Buyers lose a house because they screwed up their chance when they were the only people at the table.
- Not every house that wants a bidding war gets it. A favourite BREL strategy is to swoop in after no one shows up on offer date. Last year, there were 2 houses in the same neighbourhood taking offers the same night – one was considerably more renovated than the other, though they were priced comparably. Everyone thought the nicer house would get a lot of offers, so all 10 Buyers showed up to the house that needed work – and no one made an offer on the other one. After losing out on the OK house, our Buyers dried their tears and swooped in on the nicer house before any of the other 9 Buyers even realized it hadn’t sold. Bidding war averted.
- Consider making a bully offer – submit your offer before the magic ‘offer date’ in order to circumvent the competition. Keep in mind that you’ll need to make your offer so good that it convinces the Seller to take their house off the market. You can read more about bully offers here.
- Buy at off-season times. August and December are historically slow real estate months in Toronto, so if you aim to buy a house when everyone is at the cottage or going to Christmas parties, there’ll be less competition. Of course, those months aren’t that popular with Sellers either, so you’ll have fewer houses to choose from too.
If you want to avoid a bidding war, work with an agent who knows the game and the strategies to help you get the house of your dreams. And if you do find yourself in a bidding war, make sure you’re armed with the strategies to win it – check out our blog about Winning Bidding Wars.